TEXT
FOR DELIVERY: 9:30 A.M., E.S.T.
FRIDAY, MARCH 4, 1994
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Advance copies of this statement are made available to the
press under lock-up conditions with the explicit
understanding that the data are embargoed until 8:30 a.m.
Eastern time. ____________________________________________
Statement of
Katharine G. Abraham
Commissioner
Bureau of Labor Statistics
before the
Joint Economic Committee
UNITED STATES CONGRESS
March 4, 1994
Mr. Chairman and Members of the Committee:
My colleagues and I are pleased to have the opportunity
to comment on the employment situation in February.
The nation's labor markets continued to improve last
month. Nonfarm payroll employment rebounded from January's
weather-related weakness, although the impact of this
winter's severe weather was still apparent in several
industries. The unemployment rate was 6.5 percent in
February; it had been 6.7 percent a month earlier. These
figures are consistent with a continuation of the downward
trend in unemployment witnessed throughout 1993.
Payroll employment rose by 217,000 in February. This
gain follows a month of no employment change, according to
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our revised figures. Although the February gain was of a
magnitude similar to the substantial monthly job increases
posted in the final months of last year, some of February's
improvement reflects a return to payrolls of workers who had
been off work in the prior month as a result of the bad
weather. At the same time, employment and working hours
were held down by another siege of bad weather during
February.
The largest gain in February was in the services
industry, where employment rose by 121,000. Business
services added 62,000 jobs in February, more than making up
for the small loss in the prior month. Continued bad
weather prevented a complete recovery from the sharp drop in
amusement and recreation industry employment experienced in
January. Health services added jobs at about the same pace
as in prior months.
Retail trade also experienced a substantial rise that
may be in part a comeback from January's exceptionally bad
weather. There were job gains in general merchandise
stores, food stores, and automotive dealers and service
stations. In contrast, the eating and drinking industry,
which has accounted for much of the retail trade growth in
recent years, declined for the second consecutive month.
Many of those employed in the industry work only part time
and, if they miss a day or two of work due to bad weather,
may be off the payroll for the entire survey period.
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Elsewhere in the service-producing sector, employment
rose in wholesale trade and trucking. These industries have
been adding jobs in recent months, reflecting the increased
activity in the nation's distribution network as the economy
improves. Employment also continued to rise in finance,
particularly in the mortgage and securities segments.
The impact of February's bad weather was apparent in
both construction and manufacturing, although the nature of
the impact differed. In construction, employment was down
by about 20,000 for the second month in a row. It is, of
course, not surprising that construction layoffs would be
larger than normal because of the unusually severe and
widespread bad weather that the nation has experienced this
winter. It is worth noting that construction employment had
been on an upward trend until the recent spate of bad
weather. In manufacturing, employment rose for the fifth
straight month in February, bringing the total increase in
manufacturing employment since September to 78,000. Factory
hours, however, were off sharply (0.7 hour) from the
exceptionally high levels of recent months, again due to the
bad weather.
Returning to the data from our survey of households,
the published figures indicate a decline of two-tenths in
the overall unemployment rate between January and February
and an employment increase of 287,000 over the same period.
We must, however, be cautious in interpreting these figures,
which are based on the first results from our redesigned
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household survey. In particular, our continuing analysis of
last year's parallel survey data suggests that the seasonal
pattern of unemployment as measured by the old and the new
household surveys may differ. We suspect that the seasonal
factors we are currently using, which of necessity are based
on data from the old survey, may have led us to exaggerate
slightly the real improvement in unemployment since
December, as measured using the new procedures. Similarly,
the use of this same set of factors may cause the trend in
unemployment during the spring and early summer months to
appear less favorable than it actually is, as the normal
influx of summer jobseekers identified by our new survey
instrument may be larger than that picked up by the old one.
As discussed last month, we again have prepared a
monthly unemployment rate projection based on the
relationship between the "old" unemployment rate and other
economic data. The projected rate for February is 6.4
percent, essentially the same as that for January, though
the increasingly large standard errors surrounding these
projections should be taken into account. The chart
attached to my statement shows that, whether unemployment is
estimated on the new or the old basis, the overall
unemployment rate has fallen substantially since the
beginning of last year.
There are two unusual movements in February's data that
I would like to highlight for the Committee. First, the
number of persons working part time for economic reasons
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(sometimes referred to as the partially unemployed) dropped
by about half a million. This may reflect problems with
applying seasonal factors based on data from the old survey
to our new measure.
Second, there also was a substantial drop in the number
of persons who were unemployed for less than 5 weeks, which
pushed up the average duration of unemployment. It is
believed that this development stems at least in part from
technical factors associated with the introduction of the
improved survey questionnaire.
In summary, the labor market continued to improve in
February, despite the impact of this winter's unusually
harsh weather. Our payroll survey showed a substantial gain
in employment, as services and retail trade rebounded from
January's slump and the upward trend in other industries
such as manufacturing, wholesale trade, and transportation
continued. The adverse effects of winter remained apparent,
however, both in the decline in construction employment and
in the sharp drop in factory hours. Unemployment appears to
have continued its downward trend, but we need additional
months of data before we can be confident as to the extent
of the improvement.
My colleagues and I now will be happy to answer any
questions you may have.